[A rising price of production presupposes that the productivity of the
poorest quality land yielding no rent decreases. The assumed regulating price
of production cannot rise above £3 per quarter unless the £2½ invested in soil
A produce less than 1 qr, or the £5 — less than 2 qrs, or unless an even
poorer soil than A has to be taken under cultivation.

For constant, or even increasing, productivity of the second investment of
capital this would only be possible if the productivity of the first investment
of capital of ½ had decreased. This case occurs often enough. For instance,
when with superficial ploughing the exhausted top soil yields ever smaller
crops, under the old method of cultivation, and then the subsoil, turned up
through deeper ploughing, produces better crops than before with more rational
cultivation. But, strictly speaking, this special case does not apply here. The
decrease in productivity of the first £2½ of invested capital signifies for the
superior soils, even when the conditions are assumed to be analogous there, a
decrease in differential rent I; yet here we are considering only differential
rent II. But since this special case cannot occur without presupposing the
existence of differential rent II, and represents in fact the reaction of a
modification of differential rent I upon II, we shall give an illustration of
it [see Table VII — Ed.].

The money-rent and proceeds are the same as in Table II. The increased
regulating price of production makes good what has been lost in quantity of
produce; since this price and the quantity of produce are inversely
proportional, it is evident that their mathematical product will remain the
same.

TABLE VII

Type
of Soil

Acres

Invested Capital
£

Profit £

Price
of
Prod.
£

Output
Qrs

Sell-
ing
Price
£

Pro-
ceeds
£

Grain-
Rent
Qrs

Money
-Rent
£

Rate
of
Rent

A

1

2½ + 2½

1

6

½ + 1¼ = 1¾

3 3/7

6

0

0

0%

B

1

2½ + 2½

1

6

1 + 2½ = 3½

3 3/7

12

1¾

6

120%

C

1

2½ + 2½

1

6

1½ + 3¾ = 5¼

3 3/7

18

3½

12

240%

D

1

2½ + 2½

1

6

2 + 5 = 7

3 3/7

24

5¼

18

360%

20

17½

60

10½

36

240%

In the above case, it was assumed that the productiveness of the second
investment of capital was greater than the original productivity of the first
investment. Nothing changes if we assume the second investment to have only the
same productivity as the first, as shown in the following table:

TABLE VIII

Rent

Type
of Soil

Acres

Invested Capital
£

Profit
£

Price
of
Prod.
£

Output
Qrs

Sell-
ing
Price
£

Pro-
ceeds
£

In
Grain
Qrs

In
Money
£

Rate of
Surplus-
Profit

A

1

2½ + 2½ = 5

1

6

½ + 1½ = 2½

4

6

0

0

0%

B

1

2½ + 2½ = 5

1

6

1 + 2 = 3

4

12

1½

6

120%

C

1

2½ + 2½ = 5

1

6

1½ + 3 = 4½

4

18

3

12

240%

D

1

2½ + 2½ = 5

1

6

2 + 4 = 6

4

24

4½

18

360%

20

15

60

9

36

240%

Here, too, the price of production rising at the same rate compensates in
full for the decrease in productivity in the case of yield as well as
money-rent.

The third case appears in its pure form only when the productivity of the
second investment of capital declines, while that of the first remains constant
— which was always assumed in the first and second cases. Here
differential rent I is not affected, i.e., the change affects only that part
which arises from differential rent II. We shall give two illustrations: in the
first we assume that the productivity of the second investment of capital has
been reduced to ½, in the second to ¾.

TABLE IX

Rent

Type
of
Soil

Acres

Invested
Capital
£

Profit
£

Price
of
Prod.

Output
Qrs

Sell-
ing
Price
£

Pro-
ceeds
£

In
Grain
Qrs

In
Money
£

Rate of
Rent

A

1

2½ + 2½ = 5

1

6

1 + ½ = 1½

4

6

0

0

0

B

1

2½ + 2½ = 5

1

6

2 + 1 = 3

4

12

1½

6

120%

C

1

2½ + 2½ = 5

1

6

3 + 1½ = 4½

4

18

3

12

240%

D

1

2½ + 2½ = 5

1

6

4 + 2 = 6

4

24

4½

18

360%

20

15

60

9

36

240%

Table IX is the same as Table VIII, except for the fact that the decrease in
productivity in VIII occurs for the first, and in IX for the second investment
of capital.

TABLE X

Rent

Type
of
Soil

Acres

Invested
Capital
£

Profit
£

Price
of
Prod.

Output
Qrs

Sell-
ing
Price
£

Pro-
ceeds
£

In
Grain
Qrs

In
Money
£

Rate of
Rent

A

1

2½ + 2½ = 5

1

6

1 + ¼ = 1¼

4 4/5

6

0

0

0%

B

1

2½ + 2½ = 5

1

6

2 + ½ = 2½

4 4/5

12

1¼

6

120%

C

1

2½ + 2½ = 5

1

6

3 + ¾ = 3¾

4 4/5

18

2½

12

240%

D

1

2½ + 2½ = 5

1

6

4 + 1 = 5

4 4/5

24

3¾

18

360%

20

24

12½

60

7½

36

240%

In this table, too, the total proceeds, the money-rent and rate of rent
remain the same as in tables II, VII and VIII, because produce and selling
price are again inversely proportional, while the invested capital remains the
same.

But how do matters stand in the other possible case when the price of
production rises, namely, in the case of a poor quality soil not worth
cultivating until then that is taken under cultivation?

Let us suppose that a soil of this sort, which we shall designate by a,
enters into competition. Then the hitherto rentless soil A would yield rent,
and the foregoing tables VII, VIII and X would assume the following forms:

By interpolating soil a there arises a new differential rent I; upon this
new basis, differential rent II likewise develops in an altered form. Soil a
has different fertility in each of the above three tables; the sequence of
proportionally increasing fertilities begins only with soil A. The sequence of
rising rents also behaves similarly. The rent of the worst rent-bearing soil,
previously rentless, is a constant which is simply added to all higher rents.
Only after deducting this constant does the sequence of differences clearly
become evident for the higher rents, and similarly its parallel in the
fertility sequence of the different soils. In all the tables, the fertilities
from A to D are related as 1 : 2 : 3 : 4, and correspondingly the rents:

In brief, if the rent from A = n, and the rent from the soil of next higher
fertility = n + m, then the sequence is as follows: n : (n + m) : (n + 2m) : (n
+ 3m), etc. — F. E.]

[Since the foregoing third case had not been elaborated in the manuscript
— only the title is there — it was the task of the editor to fill
in the gap, as above, to the best of his ability. However, in addition, it
still remains for him to draw the general conclusions from the entire foregoing
analysis of differential rent II, consisting of three principal cases and nine
subcases. The illustrations presented in the manuscript, however, do not suit
this purpose very well. In the first place, they compare plots of land whose
yields for equal areas are related as 1 : 2 : 3 : 4; i.e., differences, which
exaggerate greatly from the very first, and which lead to utterly monstrous
numerical values in the further development of the assumptions and calculations
made upon this basis. Secondly, they create a completely erroneous impression.
If for degrees of fertility related as 1 : 2 : 3 : 4, etc., rents are obtained
in the sequence 0 : 1 : 2 : 3, etc., one feels tempted to derive the second
sequence from the first, and to explain the doubling, tripling, etc., of rents
by the doubling, tripling, etc., of the total yields. But this would be wholly
incorrect. The rents are related as 0 : 1 : 2 : 3 : 4 even when the degrees of
fertility are related as n : (n + 1) : (n + 2) : (n + 3) : (n + 4). The rents
are not related as the degrees of fertility, but as the
differences of fertility — beginning with the rentless soil as
the zero point.

The original tables had to be offered to illustrate the text. But in order
to obtain a perceptual basis for the following results of the investigation, I
present below a new series of tables in which the yields are indicated in
bushels (1/8 quarter, or 36.35 litres) and shillings ( = marks).

The first of these, Table XI, corresponds to the former Table I. It shows
the yields and rents for soils of five different qualities, A to E, with a
first capital investment of 50 shillings, which added to 10 shillings profit =
60 shillings total price of production per acre. The yields in grain are made
low: 10, 12, 14, 16, 18 bushels per acre. The resulting regulating price of
production is 6 shillings per bushel.

The following 13 tables correspond to the three cases of differential rent
II treated in this and the two preceding chapters with an additional invested
capital of 50 shillings per acre in the same soil with constant, falling and
rising prices of production. Each of these cases, in turn, is presented as it
takes shape for:

1) constant, 2) falling, and 3) rising productivity of the second investment
of capital in relation to the first. This yields a few other variants, which
are especially useful for illustration purposes.

For case I: Constant price of production — we have:

Variant 1:

Productivity of the second investment of capital
remains the same (Table XII).

Variant 2:

Productivity declines. This can take place only when
no second investment of capital is made in soil A, i.e., in
such a way that a) soil B likewise yields no rent (Table XIII)
or b) soil B does not become completely rentless (Table XIV).

Variant 3:

Productivity increases (Table XV). This case likewise
excludes a second investment of capital in soil A.

For case II: Falling price of production — we have:

Variant 1:

Productivity of the second investment of capital remains
the same (Table XVI).

— " — 2:

Productivity declines (Table XVII). These two variants
require that soil
A be eliminated from competition, and that soil B become rentless
and
regulate the price of production.

For case III: Rising price of production — two eventualities are
possible: soil A may remain rentless and continue to regulate the price, or
poorer soil than A enters into competition and regulates the price, in which
case A yields rent.

First eventuality: Soil A remains the regulator.

Variant 1:

Productivity of the second investment remains the same
(Table XIX).
This is admissible under the conditions assumed by us, provided the
productivity of the first investment decreases.

— " — 2:

Productivity of the second investment decreases (Table
XX).
This does not exclude the possibility that the first investment may
retain the same productivity.

— " — 3:

Productivity of the second investment increases (Table
XXI
[In the German 1894 edition this reads: XIX. — Ed.]).
This, again, presupposes falling productivity of the first
investment.

Second eventuality: An inferior quality soil (designated as a) enters into
competition; soil A yields rent.

Variant 1:

Productivity of the second investment remains the same
(Table XXII).

Variant 2:

Productivity declines (Table XXIII).

— " — 3:

Productivity increases (Table XXIV).

These three variants conform to the general conditions of the problem and
require no further comment.

The tables now follow:

TABLE XI

Type of
Soil

Price of
Production
Sh.

Output
Bushels

Selling
Price
Sh.

Proceeds
Sh.

Rent
Sh.

Rent
Increase

A

60

10

6

60

0

0

B

60

12

6

72

12

12

C

60

14

6

84

24

2 × 12

D

60

16

6

96

36

3 × 12

E

60

18

6

108

48

4 × 12

120

10 × 12

For second capital invested in the same soil:

First Case: Price of production remains unaltered.

Variant 1: Productivity of the second investment of capital remains the
same.

TABLE XII

Type
of
Soil

Price of
Production
Sh.

Output
Bushels

Selling
Price
Sh.

Proceeds
Sh.

Rent
Sh.

Rent
Increase

A

60 + 60 = 120

10 + 10 = 20

6

120

0

0

B

60 + 60 = 120

12 + 12 = 24

6

144

24

24

C

60 + 60 = 120

14 + 14 = 28

6

168

48

2 × 24

D

60 + 60 = 120

16 + 16 = 32

6

192

72

3 × 24

E

60 + 60 = 120

18 + 18 = 36

6

216

96

4 × 24

240

10 × 24

Variant 2: Productivity of the second investment of capital declines; no
second investment in soil A.

1) Soil B ceases to yield rent.

TABLE XIII

Type
of
Soil

Price of
Production
Sh.

Output
Bushels

Selling
Price
Sh.

Pro-
ceeds
Sh.

Rent
Sh.

Rent
Increase

A

60

10

6

60

0

0

B

60 + 60 = 120

12 + 8 = 20

6

120

0

0

C

60 + 60 = 120

14 + 9⅓ = 23⅓

6

140

20

20

D

60 + 60 = 120

16 + 10⅔ = 26⅔

6

160

40

2 × 20

E

60 + 60 = 120

18 + 12 = 30

6

180

60

3 × 20

120

6 × 20

[* In the German 1894 edition this reads: 20. —
Ed.]

2) Soil B does not become completely rentless.

TABLE XIV

Type
of
Soil

Price of
Production
Sh.

Output
Bushels

Selling
Price
Sh.

Proceeds
Sh.

Rent
Sh.

Rent
Increase

A

60

10

6

60

0

0

B

60 + 60 = 120

12 + 9 = 21

6

126

6

6

C

60 + 60 = 120

14 + 10½ = 24½

6

147

27

6 + 21

D

60 + 60 = 120

16 + 12 = 28

6

168

48

6 + 2 × 21

E

60 + 60 = 120

18 + 13½ = 31½

6

189

69

6 + 3 × 21

150

4 × 6 + 6 × 21

Variant 3: Productivity of the second investment of capital increases; here,
too, no second investment in Soil A.

TABLE XV

Type
of
Soil

Price of
Production
Sh.

Output
Bushels

Selling
Price
Sh.

Proceeds
Sh.

Rent
Sh.

Rent
Increase

A

60

10

6

60

0

0

B

60 + 60 = 120

12 + 15 = 27

6

162

42

42

C

60 + 60 = 120

14 + 17½ = 31½

6

189

69

42 + 27

D

60 + 60 = 120

16 + 20 = 36

6

216

96

42 + 2 × 27

E

60 + 60 = 120

18 + 22½ = 40½

6

243

123

42 + 3 × 27

330

4 × 42 + 6 × 27

Second Case: Price of production declines.

Variant 1: Productivity of the second investment of capital remains the
same. Soil A is excluded from competition and soil B becomes rentless.

TABLE XVI

Type
of
Soil

Price of
Production
Sh.

Output
Bushels

Selling
Price
Sh.

Proceeds
Sh.

Rent
Sh.

Rent
Increase

B

60 + 60 = 120

12 + 12 = 24

5

120

0

0

C

60 + 60 = 120

14 + 14 = 28

5

140

20

20

D

60 + 60 = 120

16 + 16 = 32

5

160

40

2 × 20

E

60 + 60 = 120

18 + 18 = 36

5

180

60

3 × 20

120

6 × 20

Variant 2: Productivity of the second investment of capital declines; soil A
is excluded from competition and soil B becomes rentless.

TABLE XVII

Type
of
Soil

Price of
Production
Sh.

Output
Bushels

Selling
Price
Sh.

Proceeds
Sh.

Rent
Sh.

Rent
Increase

B

60 + 60 = 120

12 + 9 = 21

5 5/7

120

0

0

C

60 + 60 = 120

14 + 10½ = 24½

5 5/7

140

20

20

D

60 + 60 = 120

16 + 12 = 28

5 5/7

160

40

2 × 20

E

60 + 60 = 120

18 + 13½ = 31½

5 5/7

180

60

3 × 20

120

6 × 20

Variant 3: Productivity of the second investment of capital increases; soil
A remains in competition; soil B yields rent.

TABLE XVIII

Type
of
Soil

Price of
Production
Sh.

Output
Bushels

Selling
Price
Sh.

Proceeds
Sh.

Rent
Sh.

Rent
Increase

A

60 + 60 = 120

10 + 15 = 25

4 4/5

120

0

0

B

60 + 60 = 120

12 + 18 = 30

4 4/5

144

24

24

C

60 + 60 = 120

14 + 21 = 35

4 4/5

168

48

2 × 24

D

60 + 60 = 120

16 + 24 = 46

4 4/5

192

72

3 × 24

E

60 + 60 = 120

18 + 27 = 45

4 4/5

216

96

4 × 24

240

10 × 24

Case: Price of production rises.

A) Soil A remains rentless and continues to regulate the price.

Variant 1: Productivity of the second investment of capital remains the
same: this requires decreasing productivity of the first investment of
capital.

TABLE XIX

Type
of
Soil

Price of
Production
Sh.

Output
Bushels

Selling
Price
Sh.

Proceeds
Sh.

Rent
Sh.

Rent
Increase

A

60 + 60 = 120

7½ + 10 = 17½

6 6/7

120

0

0

B

60 + 60 = 120

9 + 12 = 21

6 6/7

144

24

24

C

60 + 60 = 120

10½ + 14 = 24½

6 6/7

168

48

2 × 24

D

60 + 60 = 120

12 + 16 = 28

6 6/7

192

72

3 × 24

E

60 + 60 = 120

13½ + 18 = 31½

6 6/7

216

96

4 × 24

240

10 × 24

Variant 2: Productivity of the second investment of capital decreases; which
does not exclude constant productivity of the first investment.

TABLE XXI

Type
of
Soil

Price of
Production
Sh.

Output
Bushels

Selling
Price
Sh.

Proceeds
Sh.

Rent
Sh.

Rent
Increase

A

60 + 60 = 120

5 + 12½ = 17½

6 6/7

120

0

0

B

60 + 60 = 120

6 + 15 = 21

6 6/7

144

24

24

C

60 + 60 = 120

7 + 17½ = 24½

6 6/7

168

48

2 × 24

D

60 + 60 = 120

8 + 20 = 28

6 6/7

192

72

3 × 24

E

60 + 60 = 120

9 + 22½ = 31½

6 6/7

216

96

4 × 24

240

10 × 24

B) An inferior soil (designated as a) becomes the price regulator and soil A
thus yields rent. This makes admissible for all variants constant productivity
of the second investment.

Variant 1: Productivity of the second investment of capital remains the
same.

TABLE XXII

Type
of
Soil

Price of
Production
Sh.

Output
Bushels

Selling
Price
Sh.

Proceeds
Sh.

Rent
Sh.

Rent
Increase

a

120

16

7½

120

0

0

A

60 + 60 = 120

10 + 10 = 20

7½

150

30

30

B

60 + 60 = 120

12 + 12 = 24

7½

180

60

2 × 30

C

60 + 60 = 120

14 + 14 = 28

7½

210

90

3 × 30

D

60 + 60 = 120

16 + 16 = 32

7½

240

120

4 × 30

E

60 + 60 = 120

18 + 18 = 36

7½

270

150

5 × 30

450

15 × 30

Variant 2: Productivity of the second investment of capital declines.

TABLE XXIII

Type
of
Soil

Price of
Production
Sh.

Output
Bushels

Selling
Price
Sh.

Proceeds
Sh.

Rent
Sh.

Rent
Increase

A

120

15

8

120

0

0

A

60 + 60 = 120

10 + 7½ = 17½

8

140

20

20

B

60 + 60 = 120

12 + 9 = 21

8

168

48

20 + 28

C

60 + 60 = 120

14 + 10½ = 24½

8

196

76

20 + 2 × 28

D

60 + 60 = 120

16 + 12 = 28

8

224

104

20 + 3 × 28

E

60 + 60 = 120

18 + 13½ = 31½

8

252

132

20 + 4 × 28

380

5 × 20 + 10 × 28

Variant 3: Productivity of the second investment increases.

TABLE XXIV

Type
of
Soil

Price of
Production
Sh.

Output
Bushels

Selling
Price
Sh.

Proceeds
Sh.

Rent
Sh.

Rent
Increase

A

120

16

7½

120

0

0

A

60 + 60 = 120

10 + 12½ = 21½

7½

168¾

48¾

15 + 33¾

B

60 + 60 = 120

12 + 15 = 27

7½

202½

82½

15 + 2 × 33¾

C

60 + 60 = 120

14 + 17½ = 31½

7½

236¼

116¼

15 + 3 × 33¾

D

60 + 60 = 120

16 + 20 = 36

7½

270

150

15 + 4 × 33¾

E

60 + 60 = 120

18 + 22½ = 40½

7½

303¾

183¾

15 + 5 × 33¾

581¼

5 × 15 + 15 × 33¾

These tables lead to the following conclusions:

In the first place, the sequence of rents behaves exactly as the sequence of
fertility differences — taking the rentless regulating soil as the zero
point. It is not the absolute yield, but only the differences in yield which
are the factors determining rent. Whether the various soils yield 1, 2, 3, 4, 5
bushels, or whether they yield 11, 12, 13, 14, 15 bushels per acre, the rents
in both cases form the sequence 0, 1, 2, 3, 4 bushels, or their equivalent in
money.

But far more important is the result with respect to the total rent yields
for repeated investment of capital in the same land.

In five out of the thirteen analysed cases, the total rent doubles when the
investment of capital is doubled; instead of l0x12 shillings it becomes 10 × 24
shillings = 240 shillings. These cases are:

Finally, only in three cases does the total rent remain at the same level
with a second investment — for all soils taken together — as with
the first investment (Table XI); these are the cases in which soil A is
excluded from competition and B becomes the regulator and thereby rentless
soil. Thus, the rent for B not only vanishes but is also deducted from every
succeeding term of the rent sequence; the result is thus determined. These
cases are:

Case I, variant 2, when the conditions are such that soil A is excluded
(Table XIII). The total rent is 6 × 20, or 10 × 12 = 120, as in Table XI.

Case II, variants I and 2. Here soil A is necessarily excluded in accordance
with the assumptions (tables XVI and XVII) and the total rent is again 6 × 20 =
10 × 12 = 120 shillings.

Thus, this means: In the great majority of all possible cases the rent rises
— per acre of rent-bearing land as well as particularly in its total
amount — as a result of an increased investment of capital in the land.
Only in three out of the thirteen analysed cases does its total remain
unaltered. These are the cases in which the lowest quality soil —
hitherto the regulator and rentless — is eliminated from competition and
the next quality soil takes its place, i.e., becomes rentless. But even in
these cases, the rents upon the superior soils rise in comparison with the
rents due to the first capital investment; when the rent for C falls from 24 to
20, then those for D and E rise from 36 and 48 to 40 and 60 shillings
respectively.

A fall in the total rents below the level for the first investment of
capital (Table XI) would be possible only if soil B as well as soil A were to
be excluded from competition and soil C were to become regulating and
rentless.

Thus, the more capital is invested in the land, and the higher the
development of agriculture and civilisation in general in a given country, the
more rents rise per acre as well as in total amount, and the more immense
becomes the tribute paid by society to the big landowners in the form of
surplus-profits — so long as the various soils, once taken under
cultivation, are all able to continue competing.

This law accounts for the amazing vitality of the class of big landlords. No
social class lives so sumptuously, no other class claims the right it does to
traditional luxury in keeping with its "estate," regardless of where the money
for this purpose may be derived, and no other class piles debt upon debt so
lightheartedly. And yet it always lands again on its feet — thanks to the
capital invested by other people in the land, which yields it a rent,
completely out of proportion to the profits reaped therefrom by the
capitalist.

However, the same law also explains why the vitality of the big landlord is
gradually being exhausted.

When the English corn duties were abolished in 1846, the English
manufacturers believed that they had thereby turned the land-owning aristocracy
into paupers. Instead, they became richer than ever. How did this occur? Very
simply. In the first place, the farmers were now compelled by contract to
invest £12 per acre annually instead of £8. And secondly, the landlords, being
strongly represented in the Lower House too, granted themselves a large
government subsidy for drainage projects and other permanent improvements on
their land. Since no total displacement of the poorest soil took place, but
rather, at worst, it became employed for other purposes — and mostly only
temporarily — rents rose in proportion to the increased investment of
capital, and the landed aristocracy consequently was better off than ever
before.

But everything is transitory. Transoceanic steamships and the railways of
North and South America and India enabled some very singular tracts of land to
compete in European grain markets. These were, on the one hand, the North
American prairies and the Argentine pampas — plains cleared for the
plough by Nature itself, and virgin soil which offered rich harvests for years
to come even with primitive cultivation and without fertilisers. And, on the
other hand, there were the land holdings of Russian and Indian communist
communities which had to sell a portion of their produce, and a constantly
increasing one at that, for the purpose of obtaining money for taxes wrung from
them — frequently by means of torture — by a ruthless and despotic
state. These products were sold without regard to price of production, they
were sold at the price which the dealer offered, because the peasant perforce
needed money without fail when taxes became due. And in face of this
competition — coming from virgin plains as well as from Russian and
Indian peasants ground down by taxation — the European tenant farmer and
peasant could not prevail at the old rents. A portion of the land in Europe
fell decisively out of competition as regards grain cultivation, and rents fell
everywhere; our second case, variant 2 — falling prices and falling
productivity of the additional investment of capital — became the rule
for Europe; and therefore the lament of landlords from Scotland to Italy and
from southern France to East Prussia. Fortunately, the plains are far from
being entirely brought under cultivation; there are enough left to ruin all the
big landlords of Europe and the small ones into the bargain —
F.E.]

The headings under which rent should be analysed are:

A. Differential rent.
1) Conception of differential rent. Water-power as an illustration. Transition
to agricultural rent proper.
2) Differential rent I, arising from the varying fertility of various plots of
land.
3) Differential rent II, arising from successive investments of capital in the
same land. Differential rent II should be analysed:
a) with a stationary,
b) falling,
c) and rising price of production.
And also
d) transformation of surplus-profit into rent.
4) Influence of this rent upon the rate of profit.
B. Absolute rent.
C. The price of land.
D. Final remarks concerning ground-rent.

Over-all conclusions to be drawn from the consideration of differential rent
in general are the following:

First, the formation of surplus-profit may take place in various
ways. On the one hand, based on differential rent I, that is, on the investment
of the entire agricultural capital in land consisting of soils of varying
fertility. Or, in the form of differential rent II, based on the varying
differential productivity of successive investments of capital in the same
land, i.e., a greater productivity — expressed, e.g., in quarters of
wheat — than is secured with the same investment of capital in the worst
land — rentless, but which regulates the price of production. But no
matter how this surplus-profit may arise, its transformation into rent, i.e.,
its transfer from farmer to landlord, always presupposes that the various
actual individual production prices of the partial outputs of the individual
successive investments of capital (i.e., independent of the general price of
production by which the market is regulated) have previously been reduced to an
individual average price of production. The excess of the general regulating
production price of the output per acre over this individual average production
price constitutes and is a measure of the rent per acre. In the case of
differential rent I, the differential results are in themselves distinguishable
because they take place upon different portions of land — distinct from
one another and existing side by side — given an investment of capital
per acre and a degree of cultivation considered normal. In the case of
differential rent II, they must first be made distinguishable; they must in
fact be transformed back into differential rent I, and this can only take place
in the indicated way. For example, let us take Table III, S. 226.

Soil B yields for the first invested capital of £2½ — 2 quarters per
acre, and for the second investment of equal magnitude — 1½ quarters;
together — 3½ quarters from the same acre. It is not possible to
distinguish which part of these 3½ quarters is a product of invested capital I
and which part a product of invested capital II, for it is all grown upon the
same soil. In fact, the 3½ quarters is the yield from the total capital of £5;
and the actual fact of the matter is simply this: a capital of £2½ yielded 2
quarters, and a capital of £5 yielded 3½ quarters rather than 4 quarters. The
situation would be just the same if the £5 yielded 4 quarters, i.e., if the
yield from both investments of capital were equal; similarly, if the yield were
even 5 quarters, i.e., if the second investment of capital were to yield a
surplus of 1 quarter. The price of production of the first 2 quarters is £1½
per quarter, and that of the second 1½ quarters is £2 per quarter. Consequently
the 3½ quarters together cost £6. This is the individual price of production of
the total product, and, on the average, amounts to £1 14 2/7 sh. per quarter,
i.e., approximately £1¾. With the general price of production determined by
soil A, namely £3, this results in a surplus-profit of £1¼ per quarter, and
thus for the 3½ quarters, a total of £4 3/8. At the average price of production
of B this corresponds to about 1½ quarters. In other words, the surplus-profit
from B is represented by an aliquot portion of the output from B, i.e., by the
1½ quarters, which express the rent in terms of grain, and which sell —
in accordance with the general price of production — for £4½. But on the
other hand, the excess product from an acre of B over that from an acre of A
does not automatically represent surplus-profit, and thereby surplus-product.
According to our assumption, an acre of B yields 3½ quarters, whereas an acre
of A yields only 1 quarter. Excess product from B is, therefore, 2½ quarters
but the surplus-product is only 1½ quarters; for the capital invested in B is
twice that invested in A, and thus its price of production is double. If an
investment of £5 were also to take place in A, and the rate of productivity
were to remain the same, then the output would be 2 quarters instead of 1
quarter, and it would then be seen that the actual surplus-product is
determined by comparing 3½ with 2, not 3½ with 1; i.e., it is only 1½ quarters,
not 2½ quarters. Furthermore, if a third investment of capital, amounting to
£2½, were made in B, and this were to yield only 1 quarter — this quarter
would then cost £3 as in A — its selling price of £3 would only cover the
price of production, would provide only the average profit, but no
surplus-profit, and would thus yield nothing that could be transformed into
rent. The comparison of the output per acre from any given soil type with the
output per acre from soil A does not show whether it is the output from an
equal or from a larger investment of capital, nor whether the additional output
only covers the price of production or is due to greater productivity of the
additional capital.

Secondly, assuming a decreasing rate of productivity for the
additional investments of capital whose limit, so far as the new formation of
surplus-profit is concerned, is that investment of capital which just covers
the price of production, i.e., which produces a quarter as dearly as the same
investment of capital in an acre of soil A, namely, at £3, according to our
assumption — it follows from what has just been said: that the limit,
where the total investment of capital in an acre of B would no longer yield any
rent, is reached when the individual average production price of output per
acre of B would rise to the price of production per acre of A.

If only investments of capital are made in B that yield the price of
production, i.e., yield no surplus-profit nor new rent, then this indeed raises
the individual average price of production per quarter, but does not affect the
surplus-profit, and eventually the rent, formed by previous investments of
capital. For the average price of production always remains below that of A,
and when the price excess per quarter decreases, the number of quarters
increases proportionately, so that the total excess in price remains
unaltered.

In the case assumed, the first two investments of capital in B amounting to
£5 yield 3½ quarters, thus according to our assumption 1½ quarters of rent =
£4½. Now, if a third investment of £2½ is made, but one which yields only an
additional quarter, then the total price of production (including 20% profit)
of the 4½ quarters = £9; thus the average price per quarter = £2. The average
price of production per quarter upon B has thus risen from £1 5/7 to £2, and
the surplus-profit per quarter, compared with the regulating price of A, has
fallen from £1 2/7 to £1. But 1 × 4½ = £4½ just as formerly 1 2/7 × 3½ =
£4½.

Let us assume that a fourth and fifth additional investment of capital,
amounting to £2½ each, are made in B, which do no more than produce a quarter
at its general price of production. The total product per acre would then be 6½
quarters and their price of production £15. The average price of production per
quarter for B would have risen again — from £2 [In the German 1894
edition this reads: 1. — Ed.] to £2 4/13 — and the
surplus-profit per quarter, compared with the regulating price of production of
A, would have dropped again — from £1 to £ 9/13. But these £9/13 would
now have to be calculated upon the basis of 6½ quarters instead of 4½ quarters.
And 9/13 × 6½ = 1 × 4½ = 4½.

It follows from this, firstly, that no increase in the regulating price of
production is necessary under these circumstances, in order to make possible
additional investments of capital in the rent-bearing soil — even to the
point where the additional capital completely ceases to produce surplus-profit
and continues to yield only the average profit. It follows furthermore that the
total surplus-profit per acre remains the same here, no matter how much
surplus-profit per quarter may decrease; this decrease is always balanced by a
corresponding increase in the number of quarters produced per acre. In order
that the average price of production might reach the level of the general price
of production (hence £3 for soil B), it is necessary that supplementary
investments be made whose output has a higher price of production than the
regulating one of £3. But we shall see that this alone does not suffice without
further ado to raise the average price of production per quarter of B to the
general price of production of £3.

Let us assume that soil B produced:

1) 3½ quarters whose price of production is, as before, £6, i.e., two
investments of capital amounting to £2½ each both yielding surplus-profit, but
of decreasing amount.

2) 1 quarter at £3, an investment of capital in which the individual price
of production is equal to the regulating price of production.

3) 1 quarter at £4, an investment of capital in which the individual price
of production is higher by 33% than the regulating price.

We should then have 5½ quarters per acre for £13 with an investment of a
capital of £10 7/10; this is four times the original invested capital, but not
quite three times the output of the first investment of capital.

5½ quarters at £13 gives an average price of production of £2 4/11 per
quarter, i.e., an excess of £7/11 per quarter, assuming the regulating price of
production of £3. This excess may be transformed into rent. 5½ quarters sold at
the regulating price of production of £3 yield £16½. After deducting the
production price of £13, a surplus-profit, or rent, of £3½ remains, which,
calculated at the present average price of production per quarter of B, that
is, at £24/11 per quarter, represents 1 25/52 quarters. The money-rent would be
lower by £1 and the grain-rent by about ½ quarter, but in spite of the fact
that the fourth additional investment of capital in B not only fails to yield
surplus-profit, but yields less than the average profit, surplus-profit, and
rent still continue to exist. Let us assume that, in addition to investment 3),
investment 2) also produces at a price exceeding the regulating price of
production. Then the total production is: 3½ quarters for £6 + 2 quarters for
£8; total 5½ quarters for £14 production price. The average price of production
per quarter would be £2 6/11 and would leave an excess of £5/11. The 5½
quarters, sold at £3, give a total of £16½; deducting the £14 production price
leaves £2½ for rent. At the present average price of production upon B, this
would be equivalent to 55/56 of a quarter. In other words, rent is still
yielded although less than before.

This shows, at any rate, that with additional investments of capital in the
better soils whose output costs more than the regulating price of production
the rent does not disappear — at least not within the bounds of
admissible practice — although it must decrease. It will decrease in
proportion, on the one hand, to the aliquot part formed by this less productive
capital in the total investment of capital, and on the other hand, in
proportion to the decrease in its productiveness. The average price of its
produce would still lie below the regulating price and would thus still permit
surplus-profit to be formed that could be transformed into rent.

Let us now assume that, as a result of four successive investments of
capital (£2½, £2½, £5 and £5) with decreasing productivity, the average price
per quarter of B coincides with the general price of production.

Price of Production

Surplus for Rent

Capital
£

Profit
£

Out-
put
Qrs

Per Qr
£

Total
£

Selling
Price
£

Pro-
ceeds
£

Qrs

£

1)

2½

½

2

1½

3

3

6

1

3

2)

2½

½

1½

2

3

3

4½

½

1½

3)

5

1

1½

4

6

3

4½

-½

-1½

4)

5

1

1

6

6

3

3

-1

-3

15

3

6

18

18

0

0

The farmer, in this case, sells every quarter at its individual price of
production, and consequently the total number of quarters at their average
price of production per quarter, which coincides with the regulating price of
£3. Hence he still makes a profit of 20% = £3 upon his capital of £15. But the
rent is gone. What has become of the excess in this equalisation of the
individual prices of production per quarter with the general price of
production?

The surplus-profit from the first £2½ was £3, from the second £2½ it was
£1½; total surplus-profit from ⅓ of the invested capital, that is, from
£5 = £4½ = 90%.

In the case of investment 3), the £5 not only fails to yield surplus-profit,
but its output of 1½ quarters, sold at the general price of production, gives a
deficit of £1½. Finally, in the case of investment 4), which likewise amounts
to £5 its output of I quarter, sold at the general price of production, gives a
deficit of £3. Both investments of capital together thus give a deficit of £4½,
which is equal to the surplus-profit of £4½, realised from investments 4) and
2).

The surplus-profit and deficit balance out. Therefore the rent disappears.
In fact, this is possible only because the elements of surplus-value, which
formed surplus-profit or rent, now enter into the formation of the average
profit. The farmers makes this average profit of £3 on £15, or 20%, at the
expense of the rent.

The equalisation of the individual average price of production of B to the
general price of production of A, which regulates the market-price, presupposes
that the difference of the individual price of the produce from the first
investments of capital below the regulating price is more and more compensated
and finally balanced out by the difference of the price of the produce from the
subsequent investments of capital above the regulating price. What appears as
surplus-profit, so long as the produce from the first investments of capital is
sold by itself, thus gradually becomes part of its average price of production,
and thereby enters into the formation of the average profit, until it is
finally completely absorbed by it.

If only £5 are invested in B instead of £15 and the additional 2½ quarters
of the last table are produced by taking 2½ new acres of A under cultivation
with an investment of £2½ per acre, then the additional invested capital would
amount to only £6¼, i.e., the total investment in A and B for the production of
these 6 quarters would be only £11¼, instead of £15, and their total price of
production, including profit, £13½. The 6 quarters would still be sold for £18,
but the investment of capital would have decreased by £3¾, and the rent from B
would be £4½ per acre, as before. It would be different if the production of
the additional 2½ quarters required that a soil inferior to A, for instance,
A-1 and A-2, be taken under
cultivation; so that the price of production per quarter would be: for 1½
quarters on soil A-1 = £4, and for the last quarter on
soil A-2 = £6. In this case, £6 would be the regulating
price of production per quarter. The 3½ quarters from B would then be sold for
£21 instead of £10½, which would mean a rent of £15 instead of £4½, or, a rent
in grain of 2½ quarters instead of 1½ quarters. Similarly, a quarter on A would
now yield a rent of £3 = ½ quarter.

Before discussing this point further, another observation:

The average price of a quarter from B is equalised, i.e., coincides with the
general production price of £3 per quarter, regulated by A, as soon as that
portion of the total capital which produces the excess of 1½ quarters is
balanced by that portion of the total capital which produces the deficit of 1½
quarters. How soon this equalisation is effected, or how much capital with
under-productiveness must be invested in B for this purpose, will depend,
assuming the surplus-productivity of the first investments of capital to be
given, upon the relative under-productiveness of the later investments compared
with an investment of the same amount in the worst, regulating soil A, or upon
the individual price of production of their produce, compared with the
regulating price.

The following conclusions can now be drawn from the foregoing:

First: So long as the additional capitals are invested in the same
land with surplus-productivity, even if the surplus-productivity is decreasing,
the absolute rent per acre in grain and money increases, although it decreases
relatively, in proportion to the advanced capital (in other words, the rate of
surplus-profit or rent). The limit is established here by that additional
capital which yields only the average profit, or for whose produce the
individual price of production coincides with the general price of production.
The price of production remains the same under these circumstances, unless the
production from the poorer soils becomes superfluous as a result of increased
supply. Even when the price is falling, these additional capitals may within
certain limits still produce surplus-profit, though less of it.

Secondly: The investment of additional capital yielding only the
average profit, whose surplus-productivity therefore = 0, does not alter in any
way the amount of the existing surplus-profit, and consequently of rent. The
individual average price per quarter increases thereby upon the superior soils;
the excess per quarter decreases, but the number of quarters which contain this
decreased excess increases, so that the mathematical product remains the
same.

Thirdly: Additional investments of capital, the produce of which
has an individual price of production exceeding the regulating price —
the surplus-productivity is therefore not merely = 0, but less than zero, or a
negative quantity, that is, less than the productivity of an equal investment
of capital in the regulating soil A — bring the individual average price
of production of the total output from the superior soil closer and closer to
the general price of production, i.e., reduce more and more the difference
between them which constitutes the surplus-profit, or rent. An increasingly
greater part of what constituted surplus-profit or rent enters into the
formation of the average profit. But nevertheless, the total capital invested
in an acre of B continues to yield surplus-profit, although the latter
decreases as the amount of capital with under-productiveness increases and to
the extent of this under-productiveness. The rent, with increasing capital and
increasing production, in this case decreases absolutely per acre, not merely
relatively with reference to the increasing magnitude of the invested capital,
as in the second case.

The rent can be eliminated only when the individual average price of
production of the total output from the better soil B coincides with the
regulating price, so that the entire surplus-profit from the first more
productive investments of capital is consumed in the formation of average
profit.

The minimum limit of the drop in rent per acre is that point at which it
disappears. But this point does not occur as soon as the additional investments
of capital are under-productive, but rather as soon as the additional
investment of under-productive capital becomes so large in magnitude that its
effect is to cancel the over-productiveness of the first investments of
capital, so that the productiveness of the total invested capital becomes the
same as that of the capital invested in A, and the individual average price per
quarter of B becomes therefore the same as that per quarter of A.

In this case too, the regulating price of production, £3 per quarter, would
remain the same, although the rent had disappeared. Only beyond this point
would the price of production have to rise in consequence of an increase either
in the extent of under-productiveness of the additional capital or in the
magnitude of the additional capital of equal under-productiveness. For
instance, if, in the above table 2½ quarters were produced instead of 1½
quarters upon the same soil at £4 per quarter, we would have had a total of 7
quarters for £22 price of production; a quarter would have cost £3 1/7 it would
thus be £1/7 above the general price of production, and the latter would
therefore have to rise.

For a long time, then, additional capital with under-productiveness, or even
increasing under- productiveness, might be invested until the individual
average price per quarter from the best soils became equal to the general price
of production, until the excess of the latter over the former — and
thereby the surplus-profit and the rent — entirely disappeared.

And even then, the disappearance of rent from the better soils would only
signify that the individual average price of their produce coincides with the
general price of production, so that an increase in the latter would not yet be
required.

In the above illustration, upon better soil B — which is however the
lowest in the sequence of better or rent-bearing soils — 3½ quarters were
produced by a capital of £5 with surplus-productiveness and 2½ quarters by a
capital of £10 with under-productiveness, i.e., a total of 6 quarters; 5½ of
this total is thus produced by the latter portions of capital with
under-productiveness. And it is only at this point that the individual average
price of production of the 6 quarters rises to £3 per quarter and thus
coincides with the general price of production.

Under the law of landed property, however, the latter 2½ quarters could not
have been produced in this way at £3 per quarter, except when they could be
produced upon 2½ new acres of soil A. The case in which the additional capital
produces only at the general price of production, would have constituted the
limit. Beyond this point, the additional investment of capital in the same land
would have had to cease.

Indeed, if, the farmer once pays £4½ rent for the first two investments of
capital, he must continue to pay it, and every investment of capital which
produced a quarter for more than £3 [In the German 1894 edition this reads: for
less than £3. — Ed.] would result in a deduction from his
profit. The equalisation of the individual average price, in the case of
under-productiveness, is thereby prevented.

Let us take this case in the previous illustration, where the price of
production for soil A, £3 per quarter, regulates the price for B.

Selling Price

Capital
£

Profit
£

Price of
Production
£

Output
Qrs

Price of
Production
per Qr £

Per Qr
£

Total
£

Surplus-
Profit
£

Loss
£

2½

½

3

2

1½

3

6

3

—

2½

½

3

1½

2

3

4½

1½

—

5

1

6

1½

4*

3

4½

—

1½

5

1

6

1

6

3

3

—

3

15

3

18

18

4½

4½

[* In the German 1894 edition this reads: 3. —
Ed.]

The price of production for the 3½ quarters in the first two investments of
capital is likewise £3 per quarter for the farmer, since he has to pay a rent
of £4½; thus the difference between his individual price of production and the
general price of production is not pocketed by him. For him, then, the excess
in produce price for the first two investments of capital cannot serve to
balance out the deficit incurred by the produce in the third and fourth
investments of capital.

The 1½ quarters from investment 3 cost the farmer £6, profit included: but
at the regulating price of £3 per quarter, he can sell them for only £4½. In
other words, he would not only lose his whole profit, but &#163½, or 10% of
his invested capital of £5, over and above it. The loss of profit and capital
in the case of investment 3 would amount to £4½, and in the case of investment
4 to £3, i.e., a total of £4½, or just as much as the rent from the better
investments of capital; the individual price of production for the latter,
however, cannot take part in equalising the individual average price of
production of the total product from B, because the excess is paid out as rent
to a third party.

If it were necessary, to meet the demand, to produce the additional 1½
quarters by the third investment of capital the regulating market-price would
have to rise to £4 per quarter. In consequence of this rise in the regulating
market-price, the rent from B would rise for the first and second investments,
and rent would he formed upon A.

Thus although differential rent is but a formal transformation of
surplus-profit into rent, and property in land merely enables the owner in this
case to transfer the surplus-profit of the farmer to himself, we find
nevertheless that successive investment of capital in the same land, or, what
amounts to the same thing, the increase in capital invested in the same land,
reaches its limit far more rapidly when the rate of productiveness of the
capital decreases and the regulating price remains the same; in fact a more or
less artificial barrier is reached as a consequence of the mere formal
transformation of surplus-profit into ground-rent, which is the result of
landed property. The rise in the general price of production, which becomes
necessary here within more narrow limits than otherwise, is in this case not
merely the cause of the increase in differential rent, but the existence of
differential rent as rent is at the same time the reason for the earlier and
more rapid rise in the general price of production — in order to ensure
thereby the increased supply of produce that has become necessary.

The following should furthermore be noted:

By an additional investment of capital in soil B, the regulating price could
not, as above, rise to £4 if soil A were to supply the additional produce below
£4 by a second investment of capital, or if new and worse soil than A, whose
price of production were indeed higher than £3 but lower than £4, were to enter
into competition. We see, then, that differential rent I and differential rent
II, while the first is the basis of the second, serve simultaneously as limits
for one another, whereby now a successive investment of capital in the same
land, now an investment of capital side by side in new additional land, is
made. In like manner they limit each other in other cases; for instance, when
better soil is taken up.